Authorities are Targeting Healthcare Providers and Manufacturers in DME Fraud Investigations Involving Powered Wheelchairs (PWCs)

We have recently seen multiple instances of federal authorities conducting durable medical equipment (DME) fraud investigations involving powered wheelchairs (PWCs). The U.S. Department of Justice (DOJ), U.S. Department of Health and Human Services Office of Inspector General (HHS OIG), and other authorities are targeting both healthcare providers and durable medical equipment companies suspected of health care fraud in Medicare and Medicaid programs and committing other healthcare-related crimes. 

Notably, this is not a new priority for the DOJ and HHS OIG. In 2003 the HHS OIG announced a “10-point initiative to substantially curb abuse of the Medicare program by unscrupulous providers of power wheelchairs and other power mobility products.” The DOJ and Federal Bureau of Investigation (FBI) publicized multiple durable medical equipment fraud investigations involving PWCs in the 2010s. More recently, a couple of years ago the DOJ highlighted charges filed against the operators of a DME company in Texas who were accused of perpetrating a $14 million Medicare fraud scheme.

These is just an example of health care fraud scheme on federal health care programs. 

Allegations of DME fraud involving powered wheelchairs can present substantial risks. Even when these allegations do not lead to criminal charges, healthcare providers and DME manufacturers can face substantial civil and administrative penalties. These include civil monetary penalties (CMP) and Medicare exclusion, among others. In criminal cases, fines and prison time are on the table—and the DOJ has demonstrated that it is more than willing to seek these penalties when warranted. 

Understanding the Allegations in DME Fraud Investigations Involving Powered Wheelchairs 

For DME manufacturers and healthcare providers that prescribe powered wheelchairs for their patients, it is critical to understand the types of issues that can lead to DME fraud allegations. Broadly, we can separate these issues into two categories: (i) fraudulent Medicare billing; and, (ii) other healthcare-related civil and criminal offenses. 

Fraudulent Medicare Billing for PWCs, Accessories, and Maintenance 

Fraudulent Medicare billing is at the center of most federal DME fraud investigations involving powered wheelchairs. This is also usually the issue that triggers investigations into fraudulent claims for PWC accessories and maintenance. For example, in recent cases, we have seen federal authorities paying particular attention to the use of the following Healthcare Common Procedure Coding System (HCPCS) codes: 

• K0842 – This is the HCPCS code for group 2 powered wheelchairs with multiple power options, a captain’s chair, and a patient weight capacity of up to 300 pounds. Group 2 PWCs are intended primarily for use “on flat hard surfaces with minimal to moderate surface irregularity.”
• K0861 – This is the HCPCS code for group 3 powered wheelchairs with multiple power options, sling/solid seatbacks, and a patient weight capacity of up to 300 pounds. Group 3 PWCs are intended for “a mixture of continuous use on flat to rolling terrain, and hard surfaces with moderate surface irregularity.”
• E1007 – This is the HCPCS code for a power seating system with combined tilt and recline functionality and mechanical shear reduction. These systems are common accessories added to group 2 and group 3 PWCs. 
• E1010 – This is the HCPCS code for powered leg elevation systems, including leg rests, which are also commonly added accessories to group 2 and group 3 PWCs.
• E2298 – This is the HCPCS code for powered seat elevation systems, which are commonly added accessories to group 2 and group 3 PWCs as well. 

Group 2 and group 3 powered wheelchairs have greater functionality (and thus are more expensive) than group 1 powered wheelchairs, which are more basic PWCs intended for use on flat and hard ground. Since a group 1 powered wheelchair will be sufficient (at least according to the Medicare billing regulations) for many patients, Medicare billings for group 2 and group 3 powered wheelchairs have a greater risk for triggering scrutiny from the Centers for Medicare and Medicaid Services (CMS)—and subsequently from the DOJ or HHS OIG. 

Healthcare providers and DME manufacturers can run into various issues when billing Medicare under the K0842, K0861, E1007, E1010, and E2298 HCPCS codes. Some examples of issues that can lead to allegations of committing health care fraud under the False Claims Act (FCA) include: 

• Billing for Medically Unnecessary PWCs – One of the most common triggers for all types of DME-related investigations involves billing for medically unnecessary equipment and devices. For billing purposes, medical necessity must be judged according to the Medicare guidelines; and, if a PWC is not medically necessary according to Medicare, then billing is prohibited. 
• Billing for Medically Unnecessary PWC Accessories – To be eligible for Medicare reimbursement, PWC accessories must qualify as medically necessary according to the program guidelines as well. If a provider routinely prescribes or a DME manufacturer routinely supplies PWCs with certain accessories (i.e., powered seating or elevation systems), this can be a red flag for Medicare billing fraud. 
• Billing for Unnecessary PWC Maintenance and Replacement Parts – Billing Medicare for unnecessary PWC maintenance or replacement parts can lead to fraud allegations as well. This was one of the primary issues in the second DOJ enforcement action linked above, with the defendants being accused of, “bill[ing] Medicare approximately $736,072 in parts and repairs for one patient . . . [even though t]he patient was bed bound and did not have access to the power wheelchair when the repairs were allegedly conducted.”
• Recruiting Medicare Beneficiaries and Using Their Information to Bill for PWCs – Federal authorities have targeted DME companies for allegedly recruiting Medicare beneficiaries and then using their information to bill for PWCs. While cases involving questions of medical necessity will often be civil in nature, cases involving alleged “recruitment schemes” are much more likely to lead to criminal charges. 
• Selling Fraudulent PWC Prescriptions – The same is true of cases involving allegations of healthcare providers selling fraudulent PWC prescriptions. Selling any type of prescription is a serious federal offense that can lead to charges not only for Medicare billing fraud, but for other fraud-related offenses as well. 

The FCA includes provisions for both civil and criminal enforcement in cases involving improper Medicare billings. The DOJ and HHS OIG have aggressively used the FCA to target healthcare providers and DME manufacturers in recent years; and, given the substantial cost of fraud, waste, and abuse under the Medicare system, we do not anticipate this changing anytime soon. 

Other Healthcare-Related Civil and Criminal Offenses 

Along with allegations of Medicare billing fraud, DME investigations involving powered wheelchairs and accessories can lead to allegations of various other civil and criminal offenses and violations of federal statutes as well. These include (among others): 

• Fraud under 18 U.S.C. Section 1347 Health Care Fraud Statute
• Improper financial interests in physician practices
• Violations of the Anti-Kickback Statute such as paying or receiving illegal kickbacks or referral fees 
• Money laundering, wire fraud, and other federal crimes 
• Attempt or conspiracy to commit all of the above

All of these are serious offenses that carry steep penalties. With this in mind, a proactive approach to PWC billing compliance is critical; and, when facing scrutiny from the HHS OIG, DOJ, or FBI, licensed medical professionals and DME manufacturers must be prepared to defend themselves effectively. 

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Dr. Nick Oberheiden

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Former DOJ Trial Attorney

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Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

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Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

What Can (and Should) Healthcare Providers and DME Manufacturers Do to Protect Themselves?

What does it take to effectively manage PWC-related compliance and mitigate the risk of facing civil or criminal charges in the event of a DME fraud investigation? Here are five important steps (among others) that healthcare providers and DME manufacturers can take to protect themselves: 

1. Prioritize PWC-Related Compliance 

Prioritizing PWC-related compliance is essential. Without a comprehensive and thoroughly documented compliance program in place, healthcare providers and DME manufacturers won’t be able to confidently manage compliance, and they won’t be able to demonstrate compliance to federal authorities when necessary. 

2. Implement Systems for Assessing PWC-Related Compliance 

Among other things, a PWC-related compliance program should involve implementing systems that allow for assessment of the practice’s or company’s PWC-related Medicare billings as a matter of course. Billings should be checked and double-checked, and any concerns should trigger immediate follow-up action. 

3. Maintain Clear Documentation of Medical Necessity

Given the importance of medical necessity when billing Medicare, healthcare providers and DME manufacturers should be sure that they have adequate documentation on hand. If investigators cannot obtain adequate documentation of medical necessity, this will almost certainly lead to further scrutiny. 

4. Document PWC-Related Compliance Efforts On an Ongoing Basis 

Along with developing a well-documented compliance program and maintaining documentation of medical necessity, healthcare providers and DME manufacturers should also document their PWC-related compliance efforts on an ongoing basis. 

5. Have a Plan for Dealing with the HHS OIG, DOJ, or FBI

Finally, due to the risk of facing scrutiny, healthcare providers and DME manufacturers that bill Medicare for powered wheelchairs and accessories should have a plan for dealing with the HHS OIG, DOJ, or FBI if necessary. This includes (but is not limited to) having procedures in place to immediately engage legal counsel. 

Speak with a DME Fraud Defense Lawyer at Oberheiden P.C. in Confidence 

Do you have questions or concerns about facing scrutiny related to Medicare billings for powered wheelchairs, accessories, or maintenance? If so, we invite you to get in touch. To speak with a DME fraud defense lawyer at Oberheiden P.C. in confidence, please call 888-680-1745 or tell us how we can reach you online today.